The story

Insurance giant AIG will have to return to the Treasury Department the $165 million it just paid out in executive bonuses, Treasury Secretary Timothy Geithner said Tuesday in a letter to congressional leaders.

"We will impose on AIG a contractual commitment to pay the treasury from the operations of the company the amount of the retention awards just paid," Geithner wrote. "In addition, we will deduct from the $30 billion in assistance an amount equal to the amount of those payments."

That would be a double payment, essentially a $165 million penalty on AIG for issuing the bonuses.

The move comes after New York Attorney General Andrew Cuomo confirmed in a letter to Congress that this year, after receiving federal bailout money, AIG paid 73 employees bonuses of more than $1 million each. Watch congressional reaction to AIG bonuses

Cuomo also wrote that 11 of the employees no longer work for the company. The largest bonus paid was $6.4 million; seven other people also received more than $4 million each. Read full article »